Low-Risk Housing Markets?

Where is it safe to buy? This map draws on local data to measure the risks.

At the national level, the housing-market outlook remains generally gloomy. But for at least two years, some experts have argued that lower home prices and very low interest rates make this a perfect time to buy a house. The question, though, is where?

Experts say buyers can mitigate their risk by looking at markets with steady economies and low odds of falling prices. According to data from The PMI Group, a mortgage-insurance company, more than a quarter of the country’s 381 metro areas have a smaller than 30% chance of seeing lower home prices two years from now. (The firm’s research accounts for key local economic measures, such as family income and unemployment, as well as trends in real estate prices.)

Many of the most stable markets happen to be in the Heartland, where the housing boom and bust weren’t felt as keenly as on the coasts. In Madison, Wis., there’s only a 21% chance of a decline, while Omaha, Neb. boasts a modest 3.1%. Another interesting theme: Dozens of the more stable markets are college towns, where the local schools tend to provide more jobs and opportunities to network.

SmartMoney took an in-depth look at five markets with the most potential for a rebound—which makes them pretty good places to buy. Among them: Pittsburgh, where the natural gas industry is creating jobs and wealth, and Montgomery, Ala., which is growing thanks to a steady influx of stable jobs from the local Hyundai plant. The magazine also put together an interactive map detailing the home price outlook, predicting the changes home prices will be lower two years from now, for 40 of the country’s biggest metro areas []. The biggest risks remain in areas that have already been hard-hit, such as Miami, Las Vegas and Phoenix. On the bubble: areas like Dallas, Boston and Washington, D.C.

Of course, predicting the housing market is only slightly easier than handicapping the college football polls. And if the economy takes an unwelcome new dip, even the best-looking housing markets could suffer.Take a look at SmartMoney’s list and let us know what you think: Are these cities relatively safe bets? In the currently climate, is there such a thing as a low-risk housing market?